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Raj Bhatia's first visit to Chicago in 1981 was meant to be a brief trip to visit friends. But the mild-mannered 25-year-old, who had moved to New York City from India just months earlier, immediately was smitten by the Windy City. He broke away from his hosts for a few hours to scope out the local job market, eventually wandering into a Merrill Lynch branch. He was virtually hired on the spot.

Bhatia did have an attractive background: an electrical engineering degree from the Indian Institute of Technology and an M.B.A. from the Indian Institute of Management. But landing the job, and then excelling in it, was mostly a testament to his ingenuity.

Good Listener: Based on what he's hearing from Midwest clients, Bhatia is bullish on agriculture.
Bob Stefko for Barron's

With no book of business and only a couple of friends in the country, Bhatia used his noggin: He created a series of seminars about the newly created IRA account type. He and a colleague offered the talk to 27 libraries—a free but comfortable setting.

"We couldn't afford to buy hors d'oeuvres, cocktails, or lunch because Merrill had me on a stipend of $12,000 a year," Bhatia said. Three decades later—all spent with Merrill Lynch, and all in Chicago—Bhatia runs a seven-member team managing some $1.2 billion in assets for 76 clients. He ranks No. 4 on Barron's list of top financial advisors in Illinois.

Bhatia is unquestionably efficient. While many commuters are listening to drive-time sports radio, Bhatia spends much of his 45-minute commute from the suburbs on the phone focused on Merrill's daily internal conference, which highlights views from Merrill's strategists, economists, and analysts. By the time he starts talking to clients at 9 a.m., Bhatia has also dug into The Wall Street Journal, the New York Times, the Financial Times, and Chicago Tribune.

The volatile markets are making his client interactions all the more important, Bhatia says. "One of the biggest responsibilities I have is translating the gyrations and fluctuations that you see in individual asset classes into a steadier return."

To that end, he has created a basket of four investment classes that help him respond to the macro environment: Growth-sensitive, income-sensitive, "real" assets, and safety assets. The growth group includes stocks and private equity. Income generally means bonds. The "real" category is anything sensitive to inflation, such as commodities and real estate.

All the early-morning research comes in handy. "If you can wrap your arms around what is happening in the macro economy and get the direction right, then that gives you a very important indicator of whether you ought to be favoring one of these four investments," he says. Coming out of the recession, the economy saw improving growth and declining inflation; the result was a once-in-a-lifetime rally for stocks.

The safety group is full of short-term bonds, but it can also include a hedged position on a client's concentrated holding of a single stock. Bhatia removes the risk from those positions by finding a counterparty that insures against losses in exchange for much of the upside.

Today, Bhatia still favors growth and real assets, particularly real estate and gold. He compares the earnings yield on the S&P 500 with the return on a 10-year Treasury: "Good quality stocks are being offered at prices—in relationship to bonds—where they've never been."

HIS TYPICAL PORTFOLIO is now about 45% growth, 35% income, 15% real assets, and 5% safety. He says he could increase the growth bucket to 50% once the fiscal-cliff debate gets resolved.

In the equity world, Bhatia is focused on companies lifting their dividends. "We find that growth in dividends gets rewarded a lot more than simply high dividends—it's prime time for that asset class."

Bhatia is also taking cues from his own clients. "I have three clients in Wisconsin, and from what they tell me is happening to valuations in the agricultural sector and the farming sector, I'm very optimistic. Farmers are having a good time of increasing their valuations."

He says he also hears from clients who are taking advantage of 3% borrowing rates on 15-year mortgages and making a 6% to 8% cash return buying foreclosed properties.

Most immediately, he expects Washington to come to some sort of compromise in the days ahead. The politicians are likely to come out of the fiscal-cliff debate battered and exhausted, but investors will have plenty to cheer about. If the cliff is avoided -- stocks could get a nice pop.